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  • AUD/USD is struggling to find direction on Monday.
  • US Dollar Index stays in the negative territory near 90.30.
  • Wall Street’s main indexes look to open sharply lower.

The AUD/USD pair gained more than 100 pips last week and preserved its bullish momentum at the start of the week. After climbing to its best level in nearly three years at 0.7908, however, the pair lost its traction and was last seen gaining 0.25% on a daily basis at 0.7887.

In the absence of significant macroeconomic data releases, the upbeat market mood provided a boost to the risk-sensitive AUD during the Asian trading hours. With the market mood turning sour ahead of the American session, AUD/USD started to edge lower. At the moment, the S&P 500 Futures are down 0.75% on a daily basis, suggesting that major equity indexes in the US are likely to open sharply lower.

On the other hand, the greenback is so far having a tough time capitalizing on safe-haven flows and allowing AUD/USD to stay in the positive territory. The US Dollar Index (DXY) was last seen losing 0.13% on the day at 90.25. Meanwhile, the 10-year US Treasury bond yield is up more than 2% and the greenback could start outperforming the AUD in the second half of the day if yields continue to push higher. 

The Chicago Fed National Activity Index and the Dallas Fed Manufacturing Index data will be featured in the US economic docket on Monday. 

AUD/USD technical outlook

“The upside surprises in dividend announcements for Australian mining companies that tend to announce in USD and offer payment in AUD and the prospect of even larger dividends later in the year,” help AUD push higher according to Westpac analysts.

“The AUD/USD has now clearly broken out of our expected 0.76 to 0.78 range – even as the USD holds its own ground,” analysts noted. “Any dips back to 0.7750/75 should remain very well supported, with a move to 0.80 the near-term target.”

Additional technical levels to watch for


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